Far from being an exhausted art form, as V S Naipaul and others have argued, the novel is in robust

"Every American writer," Martin Amis once wrote, "is generally trying to write a novel called 'USA'." To read American fiction, at the end of the American century, to read recent works such as Don DeLillo's Underworld, Philip Roth's American Pastoral or John Updike's Rabbit tetralogy, is to encounter writers endlessly engaged in remaking the contemporary world in language. To read these writers is to realise, too, that the English language novel stuffed its belongings into a rucksack some time during the imperial twilight of the British nation, hopped on a boat and found a home among the teeming immigrant ghettos of the new world - a world offering a range and density of social experience once available only to the inhabitants of late 19th-century London.

So if, as Amis has also argued, the history of the 20th-century novel is the history of the American novel, what actually became of the English novel? After all, the British literary heritage is the richest in the world. For a start, most British writers stopped trying to write The Novel, and merely wrote novels instead, good and bad. As the nation repositioned itself as a medium-sized, post-imperial consumer society, so there was a corresponding scaling down of ambition among novelists. There were notable attempts to write a novel called "Great Britain" - Joseph Conrad's The Secret Agent, Ford Maddox Ford's Parade's End, H G Wells's Tono-Bungay, Ian McEwan's A Child in Time, Amis's London Fields, Jonathan Coe's What a Carve Up! - but, on the whole, the British century produced few, if any, canonical masterpieces to rival, say, Bleak House, Middlemarch, Tristram Shandy or the work of Jane Austen or the Brontes.

What we had instead were the great arresting works of modernism, by Conrad, Woolf and Lawrence; the proliferation of the emancipated female voice in the excellent work of, among others, Rosamund Lehmann, Sylvia Townsend Warner, Muriel Spark, Ivy Compton Burnett, Iris Murdoch and A S Byatt; the postwar professionalisation of writing and the emergence of the "career" writer; and then, finally, the long "aftermath" of the postmodernist period, when the very future of the novel itself was constantly being questioned by V S Naipaul, George Steiner and others.

What underpinned Naipaul's penetrating critique was the realisation that fiction, at its best, was about novelty - about being novel, in the true sense of the word, about breaking with the past and about the search for new forms. Or, as Ezra Pound famously put it, about "Making it New". Today, after the great experiments of the modernist period and the ironic extremism of so much postmodern fiction, we are at the end of something. After Ulysses, there is . . . what? Well, there is the literal nonsense of Finnegans Wake. After Beckett, there is only silence. After Kafka, there is only the Kafkaesque. So at a time when the novel is, formally, most free to be whatever it wants, a certain kind of accepted form has paradoxically triumphed: what one might call the bourgeois novel, written in the third person, in which the narrator is omnisciently aware of all his or her characters' thoughts, plot and the make-believe are the engines of fiction and verisimilitude is prized. "Yet there was a time," Naipaul told me, "when fiction provided discoveries about the nature of society, about states, which gave those works of fiction a validity over and above the narrative element. I don't see reading as an act of drugging oneself with a narrative. But the best novels have already been written."

Is Naipaul right in his willed pessimism? Well, yes and no. Yes, because all novels are the product of their times; they cannot be read in isolation from the historical and ideological forces that shaped them. Reflecting on the history of the 20th century, it is hard not to conclude that the greatest literary works were produced at moments of the greatest political and social upheaval; that crisis nurtured creativity. The extremism and fragmentation in the works of Joyce, Virginia Woolf and Conrad exactly mirrored the wider disorder of society at large.

The relative calm of the postwar world has coincided with a less radical will to experimentation. The 1950s in Britain, for instance, when existentialism flourished on the Continent and a new generation of Jewish-American writers were defining themselves in an age of nihilism, were a time of strange parochialism. The literature of the so-called "Angry Young Men", with their anti-establishment posturing, was no more than a literature of minor dissent, the tired old antagonisms of the wretched English class system being played out all over again. Only this time the dissenters spoke in vernacular voices (which quickly became reactionary voices). George Steiner, surveying what he has long considered to be a postwar contemporary English cultural landscape of decline, has repeatedly remarked that no ash from an Auschwitz chimney was carried on an English breeze - an oblique way of saying that affluence and a relatively benign political culture have curtailed radical invention.

But Naipaul is wrong, I think, in one important respect: he underestimates the robustness of the novel's survival instinct. In fact, the novel has never been more alive than at present, never more hungrily read by the literate masses, certainly when compared with other art forms such as the theatre, which is little more than a self-congratulatory heritage industry; and with painting, a medium increasingly being spurned by young visual artists in their search for new forms.

"Whoever wants to be creative in good and evil," wrote Nietzsche, "he must first be an annihilator and destroy values." A hatred of the past and of the great tradition is precisely the motor driving the work of the young visual artists of the Goldsmiths' school, many of whom make confrontational art objects through manipulating entirely new "unartistic" materials - polyurethane, blood, urine, skin. It's too easy to dismiss their efforts, as the former Tory MP George Walden and others have done, as being little more than a footnote to Duchamp. Their work and media prominence is a direct consequence of the crisis in painting, and all the more valuable for that.

Film, once apparently destined to become the most exciting artistic medium of the century, also remains resolutely unimpressive - conservative, expensive to make, over-reliant on traditional forms of storytelling and in thrall to an insidious cult of celebrity. Perhaps only music, in all its myriad forms, high and low, rivals the supremacy of the novel at the end of the century.

The key to the longevity of the novel - indeed to the popularity of a work such as Bridget Jones's Diary - is that it offers a stylised insight into one of the great human mysteries: that of consciousness. No other artistic medium rivals this privilege of inwardness, this access to interiority and the loneliness of the self. Nor rivals the cheapness of writing itself: that, romantically, you need nothing but the proverbial blank sheet of paper and a pen to begin to transform the world around you - and the empirical privacy of your own thoughts - into a public language. That is, at least, until you write the first sentence - and then the real problems begin.